I want to invest Rs 2,000/month in SIP. Should I invest in one fund or two? Also, I would like to know about various types of SIPs and their performance.
- Smita Singh
An SIP is an acronym for Systematic Investment Plan. That means, you invest fixed amounts at pre-determined periods in your mutual fund. Depending on the net asset value (NAV) on the date of your purchase, you will get units assigned to you. The three types available are: Quarterly SIP (invest in units once in 3 months), monthly SIP (every month) and daily SIP (every day). The performance will depend on the scheme in question.
We suggest that you invest in two funds, Rs 1,000 in each SIP.
Either you pick two balanced funds or two equity funds from the options given below. If stability is more of a concern, then opt for balanced funds since they have a substantial debt component to their portfolio and are not pure equity oriented. If you are looking for higher returns and willing to sacrifice stability and live with some amount of turbulence, then you can go for equity funds. The ones we have suggested have a large-cap tilt.
You sound like a first-time investor. If that is the case, we suggest you opt for balanced funds. Later you can go in for a pure equity scheme. However, the final decision based on stability and return is a call you will have to make.
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This article was originally published on June 18, 2010.
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